How To Calculate Overtime

Knowing how to calculate your correct overtime wages is crucial. Your employer may be taking advantage of you, but without following your own hours, you would never know.

The Department of Labor has an overtime calculator that can help. It’s extremely comprehensive, with programs for workers who make tips, salaries and hourly wages.

We suggest tracking your hours on a weekly basis and figuring out how much you’re owed under federal law. Then check to make sure that your paycheck or cash wage reflects your real pay. That’s the best, and often the only way to catch a wage and hour violation.

How Do You Calculate Overtime Pay?

If you’ve already determined that you’re entitled to overtime under the Fair Labor Standards Act (FLSA), how you calculate your extra wages will depend on how you get paid:

Before we begin, note that overtime is always calculated on a weekly basis; averaging two or more weeks together to get around the 40 hour limit is illegal.

For every week, you’ll consider the hours you actually worked, how much you’re normally paid and determine your overtime wages based on those numbers.

Remember: nonexempt workers are entitled to one-and-a-half their regular rate for all hours worked over 40 in a workweek.

Hourly Employees

1. Add up all the hours you worked in the week.

For the sake of argument, let’s say you worked 48 hours this week. Hours worked must include all pre- and post-shift work you do, as well as normally unpaid lunch breaks that get interrupted by your duties.

Take the 8 hours of overtime you worked and multiply them by your overtime rate, $13.50. 8 times $13.50 equals $108.

5. Add your overtime wages to your straight-time wages.

$360 plus $108 equals $468. Those are your proper wages for the week.

Want to do this calculation quickly? Check out our overtime calculator here.

Tipped Employees

Employers are allowed to take a “tip credit” for workers who make regular tips, reducing their cash wages below the applicable minimum wage. But added together, the tip credit plus the worker’s cash wages have to be at least the minimum wage.

Let’s say you make good tips and your employer takes the maximum tip credit allowed by federal law: $5.12, making the cash wages they actually pay you $2.13.

For overtime, they’re not allowed to start with that low cash wage to calculate your overtime rate; they have to use at least the minimum wage. If your tips and cash wage add up to an hourly wage higher than the minimum, they have to use that higher wage.